Tales of reconstruction: How do you assess damage of this magnitude?

March 28th, 2011 by Philip Brasor & Masako Tsubuku

Last week, the central government said it would pick up the tab for almost all of the rebuilding in the coastal areas of northeastern Japan devastated by the earthquake and tsunami of March 11. This is obviously a big relief to local governments in the affected cities and towns, many of which saw entire infrastructures wiped out in a matter of minutes.

This property condemned: Building damaged in 2007 Ishikawa earthquake

The stickier problem is what to do about private property. Residents’ possessions, including homes, are spread out over vast expanses of no man’s land. To clean up the mess, laws regarding private property will have to be bent or even ignored. The government has already issued guidelines for the cleanup, even though it doesn’t necessarily have a clear understanding of the situation on the ground. But local governments are demanding something be done so that they can get to work. The governor of Miyagi Prefecture asked the Maritime Safety Agency to help it process all the boats and ships strewn over the blasted landscape. As of last weekend, the agency said it had processed 245 vessels but had only “returned” 13 to their owners. The rest were brought to a makeshift area that is causing problems since level land is desperately needed for temporary housing. But with harbors destroyed, there is no place to put the vessels while the agency identifies owners, who are then expected to dispose of them. With more than 6,000 people still listed as missing in Miyagi, something needs to be done quickly.

Homes are an even bigger problem. According to the Disaster Relief Act, which was first passed in 1998 in response to the Great Hanshin Earthquake and then amended in 2007 following the Kashiwazaki-Kariwa earthquake in Niigata Prefecture, a family whose home has been “completely” (zenkai) destroyed in a natural disaster is eligible to receive ¥1 million in compensation, plus ¥2 million toward the building of a new home. In addition, if the main wage earner in a family is killed in a natural disaster, the family can receive a maximum of ¥5 million, or up to ¥2.5 million if the main wage-earner has been seriously injured. Families whose homes are not completely destroyed can also receive money in lesser amounts; and those whose household incomes are below a certain level can take out government loans for up to ¥2.5 million for home repairs at 1.25 percent interest. Before the Great Hanshin Earthquake there was no government program for compensating victims of natural disasters, the idea being that private citizens are on their own, but public opinion against what was perceived as a cold official policy in the face of the destruction of Kobe led the government to implement the Disaster Relief Act. And in the face of even greater destruction, it now says it may amend it again, increasing the upper limit for compensation by ¥1 million.

Before the 2007 amendment, compensation could only be used for homes that are lost, but now they can be used for almost any purpose. However, the main administrative problem now is that before the government pays out to victims who did lose homes, property assessors have to “inspect” those homes, even if they don’t exist any more. In Miyagi there are only 282 licensed property assessors and, needless to say, they are overwhelmed. The affected prefectures are trying to import assessors from elsewhere in Japan to help. Many of these homes have been rendered as splinters of wood and swept away: What is there to assess? Usually, homes have to be declared destroyed before the debris is carted away, otherwise local governments could be subject to lawsuits from homeowners who claim they weren’t consulted beforehand. As it stands, the emergency guidelines say nothing about the “evaluation” of the debris. The central government simply assumes that all homeowners want local administrations to clean up the mess so that they can start rebuilding as soon as possible.

There are other considerations that will delay reconstruction of private property. First of all, some local administrations will have to carry out city planning operations, which will likely affect property lines. Also, because most Japanese home loans are so-called recourse loans, even homeowners who lost their structures in the tsunami will have to pay off their mortgages before they start building new ones. If they have insurance they’ll have to wait for an additional assessment and still pay property taxes on land, though not on the structures (property taxes in Japan are twofold — land and building, with the building portion typically decreasing over time as the structure loses value). The central government is asking local governments to reduce property taxes for the time being.

Yen for Living is produced by Philip Brasor, a freelance writer-for-hire, and Masako Tsubuku, a freelance translator and interpreter. They are currently working together on a book about Japanese housing that will probably never be finished. In the meantime they have their own blog on the subject: Cat Foreheads & Rabbit Hutches. You can read more by Philip at philipbrasor.com.

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on Monday, March 28th, 2011 at 3:38 pm and is filed under Housing & Real Estate, News, Taxes & Welfare.
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5 Responses

Is Philip Brasor working on a book about housing that will never be finished? Or about housing that will never be finished?

Good article on the situation for those of us in the U.S. who are trying to get an idea of how tough it will be for the Japanese to rebuild.

My home (a rental apaato) was rendered “zenkai” in the Kobe quake. From what I recall, I received 300k initially as a Red Cross handout, and later 100k as compensation money. Those sums applied to each household, regardless of the number of family members; something I found outrageous at the time. I also got big tax breaks for several years. Every little bit helped.

Oh, it took so long to get my shit together afterwards. I can’t bring myself to think about it.

I’ve heard non-governmental payments for such disasters vary widely depending on the number of people affected. For instance, the victims of the Okushiri tsunami in 1993 each received something like 20 or 30 million yen because so many people donated money and there were relatively few recipients to divide it among.

This may sound trivial, but I’m curious: Did your landlord refund your security deposit after the earthquake? I’ve also heard they are required to but usually don’t for obvious reasons.

After much tussling and a couple of heated arguments that nearly came to blows (literally, standing there in the wreckage), my elderly landlord finally agreed to return the deposits to each of the tenants. We acted as a group, so he really had no choice but to go along with us. We had to sign away our “right” to sue him (not that I had any intention of doing so anyway, I just really needed the money!). I think it was 200k in my case, and some of us were surprised to learn that he’d demanded varying amounts from each tenant (my next door neighbours had been charged double that, they were livid!).

I remember having to call him a few times to remind him to put the money in my bank account, which he finally did after carefully subtracting the banking fees. I did feel sorry for him. I heard of an elderly couple who took their own lives because of so many hassles dealing with their tenants after the quake. It was hard on everyone.

In my previous post I made a mistake with the figures, I received one million yen from the government (not 100k). I seem to recall some smaller figures, such as 20k, that came from donations too.